At its Investor Day, Tesla announced that the company will use rare earth free permanent magnets in the drivetrains for its next-generation models.

Early on in its history, Tesla reviewed the use of permanent magnets in its electric vehicle (EV) drivetrains, though settled on induction motor technology to avoid supply chain risk within the rare earth industry. In 2017, however, Tesla began incorporating rare earth permanent magnet motors into its Model 3 vehicles and more recently its Model Y range. The use of rare earth permanent magnet motors improved motor efficiency and more significantly cut costs on batteries while maintaining driving range.

Rare earth permanent magnets, specifically neodymium-iron-boron (NdFeB), are the strongest known permanent magnets to date and have allowed for the miniaturisation, light-weighting and improved energy efficiencies across a myriad of applications, including the electric motor. Given the cost and supply risk pressure from lithium-ion batteries, the use of NdFeB magnets in EV drivetrains have been locked into most EV designs. However, western motor designers are working hard to reduce the requirement of rare earths through innovative designs, as over 95% of NdFeB magnets needed for EVs are sourced from China, where rare earth technology research and development is more established.

Tesla announced that it has managed to reduce the use of NdFeB magnets by 25% in the drivetrain between 2017 and 2022, though the indicated switch to rare earth free permanent magnets – i.e., not using NdFeB magnets – is further evidence that the company is addressing potential supply chain bottlenecks. Over the medium term, technological developments in motor design will allow for substitution, but ultimately the NdFeB magnet maintains it status as the most ‘bang-for-buck’ energy conversion in permanent magnet motor designs and allows for the added upside of reducing battery costs or increasing driving range.